- Blue chips down 16 points at 8,323
- Retail sales underwhelm
- Energy bills to fall
3.58pm: FTSE looks set for worse finish
The FTSE 100 looked to cap off the week with a worse performance.
By late trading, London’s blue-chip index was down 16 points at 8,323, as gains by the likes of Ocado, M&S and B&Q owner Kingfisher failed to buoy the FTSE 100.
Energy companies and utilities were among companies to fall on Friday, with Nation Grid, Centrica, Severn Trent and United Utilities all down.
Friday's fall took the FTSE 100 down 95 points, or 1.1%, for the week.
US indices looked to fare better in the meantime, with the S&P 500, Nasdaq and Dow Jones all up in morning trading across the Atlantic.
IG analysts noted US stocks had shrugged off “risk-off sentiment amid this week's 'rates higher for longer' outlook”, after durable goods order data on Friday showed an unexpected rise for April.
3.41pm: US on “unsustainable fiscal path” - Fed governor
Federal Reserve governor Cristopher Waller has warned “unsustainable” borrowing by the Biden administration risks leading to higher interest rates.
“The US is on an unsustainable fiscal path,” Waller told Iceland’s Reykjavik Economic Conference on Friday.
“If the growth in the supply of US Treasuries begins to outstrip demand, this will mean lower prices and higher yields.
This would “put upward pressure” on the neutral rate, he warned.
President Biden had cancelled some US$7.7 billion (£6.05 billion) worth of student debt, held by 160,000 borrowers, earlier this week, taking the total amount of debt forgiveness under his administration to US$167 billion.
3.30pm: Ocado jumps as things look like only getting better for retail
Ocado Group PLC (LSE:OCDO) looked to solidify its spot as Friday’s top FTSE 100 riser, climbing by 4.6% to 368.30p.
Though weak retail sales data for April looked to highlight the ongoing cost pressures consumers faced, analysts seemed optimistic things could improve for the sector soon.
“Weak retail figures shouldn’t have surprised given the miserable weather we’ve had for much of 2024,” AJ Bell’s Russ Mould noted.
“The sooner interest rates are cut, the better, as far as investors are concerned.
“Not only should that make consumers feel a bit more confident about their finances, but it should also put businesses in a stronger position to increase investment.”
Analysts had highlighted subsiding inflation and growing wages as reasons for optimism earlier in the day.
B&Q owner Kingfisher PLC (LSE:KGF) and Marks and Spencer Group PLC (LSE:MKS) also held onto gains in late trading.
The FTSE 100 as a whole fell by 11 points to 8,327 during the day, though, weighed down by the likes of utilities.
“This comes as Severn Trent, the water utility company, reported stronger than expected earnings earlier this week,” XTB’s Kathleen Brooks explained.
“The stock rose to a 5-month high earlier this week, however, it has experienced a sharp selloff, as the market focuses once more on the challenges facing the water sector as it struggles to maintain clean rivers and waterways with the changing, wetter weather in the UK.”
3.00pm: AJ Bell slips as boss sells £28mln worth of shares
AJ Bell slipped 3% on Friday on news chief executive Andy Bell had sold £28.1 million worth of shares in the online investment company.
Bell sold 7.5 million shares at 375p each, marking a 7% discount to Thursday’s closing price, a regulatory filing showed.
Bell has been left with an 18.7% stake in AJ Bell, which he founded, following the move.
This came after shares in the company jumped on Thursday following results showing a 47% jump in pre tax profit to £61.4 million, reflecting an improved margin of 46.8%.
Director Billy Mackay and chief technology officer Amber Tagari have also sold parts of their stakes in AJ Bell, another filing on Thursday showed.
Shares fell 3.9% to 387.28p.
2.43pm: Positive start on Wall Street
Wall Street enjoyed a positive start as trading got underway on Friday.
The Nasdaq was up 64 points after the opening bell, reversing falls seen on Thursday despite NVIDIA Corp (NASDAQ:NVDA, ETR:NVD)’s rally after beating first-quarter expectations.
The Dow Jones and S&P 500 also climbed, by 64 and 18 points respectively, after slipping alongside the Nasdaq earlier on in the week.
Thursday drop “was triggered by expectations the Fed’s first interest rate cut could [be] delayed by several further months, after a much stronger-than-expected US business activity ended a run of soft data releases,” City Index’s Fawad Razaqzada explained.
Attention turned to durable goods orders, due on Friday afternoon, while Federal Reserve governor Cristopher Waller is also set to speak later on.
“Markets [are] hoping for weakness given the ‘good news is bad news’ construct highlighted by yesterday’s PMI release,” Scope Markets analyst Joshua Mahony added.
“With the FOMC minutes highlighting a mixed range of views that included the potential to hike rates further, any pop in the core durable goods orders figure could further drive risk-off sentiment given the implications for monetary policy.”
1.55pm: Thames Water to wait longer for decision on bill hike plan
More on Thames Water and Ofwat has reportedly pushed back its review of the supplier’s plan to hike bills.
According to the Telegraph, the date by which Ofwat will approve or block the plan has been changed from June 12 to July 11.
Such plan would see Thames Water hike bills by 45% over the coming years as it grapples with high debt and plans £19.8 billion of investment for 2025 to 2030.
Thames has appeared on the brink of collapse, with payments to bondholders being defaulted on, board members quitting and plans reportedly being drawn up to unload £500 million worth of loans onto the market most recently... Read more
1.43pm: Retailers climb despite poor April sales
Ocado Group PLC (LSE:OCDO), Kingfisher PLC (LSE:KGF) and Marks and Spencer Group PLC (LSE:MKS) were among the FTSE 100’s top risers into Friday afternoon.
Up 1.7%, 1.2% and 0.9%, gains came despite worse-than-expected retail sales data for April earlier in the day.
Analysts subsequently noted sales should tick up in the coming months as the likes of lower inflation and growing wages help to deepen consumer pockets.
Fresnillo PLC (LSE:FRES) topped the day’s losers, down 2.5%, while Lloyds Banking Group PLC (LSE:LLOY), St James’s Place PLC and Entain PLC (LSE:ENT) also fell.
“European equity markets are on track for their worst weekly performance in three weeks, as risk sentiment sours and interest rate bets get pushed back once again,” XTB analyst Kathleen Brooks said.
“Stronger than expected CPI in the UK, an increase in negotiated wage growth in the first quarter for the Eurozone, hawkish Fed minutes in the US and strong PMI data have all contributed to a ‘risk off’ tone to markets, even though Nvidia’s monster results suggest that the AI boom still has much further to go.”
1.14pm: Wall Street to open higher
Futures contracts are pointing to a bullish start to Friday for the US markets, with the Nasdaq 100 tipped to open 54 points above yesterday’s close.
The broader S&P 500 index is set to open 15 points higher at 5,283.
Following yesterday’s blockbuster earnings report, chipmaker NVIDIA Corp (NASDAQ:NVDA, ETR:NVD) is expected to add another percentage point after rally to an all-time high yesterday.
Things are quieter on the company news front today, with attention turning to durable goods orders and consumer sentiment on the macroeconomic calendar.
12.57pm: Thames Water lender seeking to offload £500mln
A lender to crisis-struck utilities provider Thames Water is seeking to offload £500 million worth of loans onto the market, according to a Bloomberg report citing “people with knowledge of the matter”.
The lender is also hoping to offload £100 million in bonds, according to the report.
Amid financial stress and a walloping £16 billion debt pile, Thames Water’s bonds have plummeted to just 5.8p on the pound.
Though this presents a steal for potential buyers who may be more optimistic about Thames Water’s prospects than market pricings suggest, the company’s troubles are manifold.
Parent company Kemble’s debt was heavily discounted after defaulting on £400 million of bonds in April, with recent turmoil among the board of directors adding to the woes.
Thames Water’s largest shareholder Omers Infrastructure withdrew its board representative last week, with more board members subsequently quitting this week.
Omers fully wrote down its 31.7% stake in Kemble, calling the utility “worthless” and “uninvestable”.
12.25pm: Bitcoin, Ethereum down despite landmark ETF approval
Bitcoin (BTC) fell for the fourth day in a row on Friday, wiping out the majority of the gains penned on Monday.
The world’s largest cryptocurrency closed 1.7% on Thursday, with the BTC/USD pair dipping another 0.8% this morning.
Attention has firmly shifted to Ethereum (ETH), the second-largest cryptocurrency, following spot-ether approvals in the US.
Speaking on the development, ETC Group suggested that the regulatory nod, which effectively brings ether to the mainstream stock market, will result in approximately $1.65 billion of “potential” net inflows in the first three months of trading.
“The approval marks a significant shift in sentiment within the SEC and among US regulators in general but US investors still received inferior investment vehicles compared to European vehicles,” said ETC Group.
It may take a few months for the ETF products to officially launch, ETC Group suggested. Once they do, ETC Group suggested a potential 92% increase on the ETH/USD pair.
At the time of writing, ETH/USD was swapping for $3,706, over 22% higher week on week.
Interestingly, the pair dipped 2% following the SEC’s approval, suggesting the event was already priced in.
12.03pm: Things can only get better (apart from standing charges)
D:Ream’s early-90s hit found itself a new lease on life after drowning out Prime Minister Rishi Sunak’s damp election announcement on Thursday, but things are getting better for personal finances too.
That’s according to interactive investor’s senior personal finance expert Myron Jobson, who said that Ofgem’s decision to drop the energy price cap “adds to a growing sense that things are getting better for personal finances”.
There are caveats though.
“The harsh reality is many aren’t feeling it,” stated Jobson. “The substantial jump in the cost of renting and high mortgage rates have come at a high cost in pounds and pence terms. The savings from the fall in the energy price cap won’t touch the sides of what’s needed to offset the heightened housing cost burden for many households.
“Energy bills have thankfully come down after reaching record highs in 2022. However, households are still set to pay 44% more, or £484 on average, than they did three years ago in summer 2021, before the energy price shock caused mainly by Russia’s invasion of Ukraine.
Jobson highlighted standing charges as a “thorny issue” affecting energy consumers. “They are applied to gas and electricity bills regardless of whether customers have used any energy, which makes it harder for people to save money by using less energy.”
11.38am: Nvidia price cuts
Briefly looking stateside, NVIDIA Corp (NASDAQ:NVDA, ETR:NVD) has reduced prices on some of its high-end AI chips in China by up to 20%, according to an exclusive report by Reuters.
This move is seen as a strategic effort to remain competitive against Huawei, a major Chinese tech company.
The price cut specifically affects the A800 chip, which Nvidia developed as an alternative to the A100 chip.
Nvidia began shipping the A800 chip to mainland China after the Biden administration's export ban on the cutting-edge A100 chip.
US tech sanctions against China aim to curb the Communist Party’s development of military-grade AI technology, but they are also causing challenges for Nvidia.
During the company's first-quarter earnings call on Wednesday, senior Nvidia executives cautioned about "substantially" lower sales in China due to the export restrictions.
"Our data center revenue in China is down significantly from the level prior to the imposition of the new export control restrictions in October," said Colette Kress, chief financial officer. "We expect the market in China to remain very competitive going forward."
Despite these challenges in China, Nvidia surpassed analysts’ expectations with a significant earnings beat, boosting the chipmaking giant’s valuation by hundreds of billions of dollars.
11.16am: St James’s Place FTSE 100’s biggest loser after Hargreaves bid-fuelled rally
St James’s Place PLC emerged as the FTSE 100’s biggest loser on Friday, falling 3.1% after having climbed on news of a bid for rival Hargreaves Lansdown.
Hargreaves itself was down 5% on Friday, after spiking on news of the rejected £4.7 billion bid by CVC Capital Partners, Nordic Capital and a subsidiary of Abu Dhabi Investment Authority.
The consortium subsequently said another “possible offer” was being considered, adding a “further announcement will be made as and when appropriate”.
HL’s second-largest individual shareholder Stephen Lansdown said the bid had “woken the stock up” in the meantime.
HL had jumped 14% on Thursday, while peer St James's Place gained 5%.
“It’s interesting to see that third parties are now seeing the value in Hargreaves Lansdown and looking to take advantage of it,” he added.
The FTSE 100 ticked down 28 points to 8,310, as Fresnillo PLC (LSE:FRES), Lloyds Banking Group PLC (LSE:LLOY) and Experian (LSE:EXPN) PLC were among others to also fall.
11.01am: Oil slips as OPEC delays meeting
Oil prices dropped on Friday on news major oil-producing nations, or OPEC+, had pushed back their latest meeting to discuss supply cuts.
Benchmark Brent Crude fell 2% to US$80.74 a barrel, having peaked above US$90 in early April.
Having committed to cuts of around 2.2 million barrels daily collectively this year, OPEC+ delayed the date of its next meeting by a day to June 2.
This comes against the backdrop of increasing output from the United States, alongside fears over demand due to high interest rates globally.
10.33am: Consumer confidence grows in May
Consumer confidence indicators have improved this month, driven by a better outlook for personal finances, GfK has reported.
The Consumer Confidence Index climbed by two points in May to minus-17, the firm said on Friday.
This was as forecasts for personal finances over the coming year rose strongly by five points to positive seven.
“With the latest drop in headline inflation and the prospect of interest rate cuts in due course, the trend is certainly positive,” GfK client strategy director Joe Staton said.
“All in all, consumers are clearly sensing that conditions are improving.”
He did highlight a reduction in GfK’s major purchase measure, however, highlighting reduced confidence over buying big-ticket items.
“With costs still heightened and some people still having to adjust to higher mortgage costs, the challenge for consumer spending is whether any future lowering of costs ends up being saved rather than spent,” KPMG’s Linda Ellet added.
10.00am: Gas up 12% over week on supply fears
Natural gas prices have jumped 12% over the course of the last week as concern built over supply.
By Friday morning, UK gas prices had increased from 74.36p per British thermal unit to 83.29p over the week.
This follows an unplanned outage at a major Norwegian plant, with the country key in supplying the rest of Europe.
Flows from Russia to Austria, which still largely relies on Moscow’s gas, have also been placed in doubt over a reported foreign court ruling banning payments to Gazprom.
9.42am: Mondi gains on €500 million Eurobond launch
Mondi PLC (LSE:MNDI) enjoyed a bright start to Friday after yesterday’s announcement that it had launched a €500 million Eurobond.
“This bond will extend our debt maturity profile and further strengthen the group’s liquidity position,” chief financial officer Mike Powell said.
The bonds include a 3.75% interest rate and are set to mature in 2032.
An application will be made for the securities to be listed on the London Stock Exchange’s regulated market, according to the company.
Shares climbed 2.1% to 1,607.50p on the news, placing Mondi among the FTSE 100’s biggest daily risers.
The index overall fell 34 points to 8,305 in the meantime.
9.32am: Abrdn climbs as boss set to depart
Abrdn gained ground on news it would part company with chief executive Stephen Bird after four difficult years
In a statement, abdrn said that he and the group’s board had agreed the time was right for Bird to hand over the reins.
In his time in office, Abrdn’s value has almost halved with the company regularly lampooned for a name change that saw the vowels removed from Aberdeen, its previous name… Read more
Shares climbed 1.1% to 157.75p on the news.
9.18am: UK economic growth to cool this quarter - analyst
UK gross domestic product (GDP) growth will likely cool between April and June against the first quarter, EY analysts say.
After retail sales data came in worse than expected on Friday, EY said GDP growth would be better than April in May but not be as strong over the second quarter, after the UK exited recession earlier this year.
“It's clear that the retail sector is still struggling to generate much momentum,” EY economist Peter Arnold said.
Sales over the course of April fell 2.3% month-on-month, against a 0.2% decline in March and worse than expectations for a 0.4% drop.
Highlighting softer composite Purchasing Managers’ Index data on Thursday, Arnold added: “It suggests that the UK is likely to see a weaker outturn for GDP growth in Q2, after Q1's very strong performance.”
8.53am: The morning so far
The FTSE 100 index fell as much as 70 points in opening exchanges. Despite a slight recovery, the blue-chip index remained 47 points lower at 8,292 after the first hour of trades.
Retail sales data for April severely undershot forecasts, falling 2.3% month on month.
It follows a 0.2% fall in March and is much worse than the forecasted 0.4% drop, with sales volumes declining across most sectors.
On the company news front, GSK won a high-stake personal injury case in the state of Illinois, US, over its heartburn medication Zantac.
A jury determined that Zantac was not responsible for the plaintiff’s colon cancer, with the judge rejecting a request for $640 million in damages. Shares added 0.2%
National Grid was the biggest faller of the morning following yesterday’s heavily discounted rights issue.
Speaking of energy, regulator Ofgem has confirmed bills will fall by 7% in July, or £122 on an annualised basis.
The energy price cap will be set at £1,568 for direct debit customers from July to the end of September, down from £1,690 currently, Ofgem said on Friday.
Intertek was among the top risers after the assurance, testing, inspection and certification (ATIC) services provider Intertek provided an upbeat trading update.
The company reported like-for-like (LFL) revenue growth of 7% at constant currency for the first four months of 2024. Shares added 2.1%.
Other top risers in the opening hour included Mondi PLC (LSE:MNDI), Ocado Group PLC (LSE:OCDO), BT Group PLC (LSE:BT.A) and Next plc.
8.25am: Stocks fall
The FTSE 100 index fell 66 points to 8,272 this morning, extending blue-chip losses encountered on Thursday.
National Grid was the biggest faller after Ofgem announced a drop in the energy price cap. DS Smith, St James’s Place and Entain were also off.
8.18am: Intertek sent higher following upbeat trading update
Assurance, testing, inspection and certification (ATIC) services provider Intertek provided a “typically upbeat and ebullient” trading update today, per the words of Shore Capital Markets.
The company reported like-for-like (LFL) revenue growth of 7% at constant currency for the first four months of 2024.
Divisional growth was strong, with Consumer Products growing by 6.2%, Corporate Assurance by 7.6%, Health and Safety by 9.9%, Industry and Infrastructure by 4.2%, and World of Energy by 9.4%.
“We fundamentally like these ‘ATIC’ activities… being a necessary and growing element within the global economy, underpinning quality companies’ operations,” said Shore Cap.
Shares added 2.85%.
7.59am: Energy bills to fall by £122
Energy regulator Ofgem has confirmed bills will fall by 7% in July, or £122 on an annualised basis.
The energy price cap will be set at £1,568 for direct debit customers from July to the end of September, down from £1,690 currently, Ofgem said on Friday.
This determines how much suppliers can charge per unit of electricity or gas, with these set to cost 22.36p and 5.48p per kilowatt-hour respectively.
Prepayment meter customers will see the cap reduced to £1,522, while it will be set at £1,668 for those on standard credit deals.
“Another fall in the price cap is good news for customers who were facing bills that were hundreds of pounds higher this time last year,” Energy UK deputy chief executive Dhara Vya commented.
Ofgem’s cap had sat at £2,074 last July, on the back of higher energy prices after Russia’s invasion of Ukraine.
7.40am: Retail sales fall far short of forecasts
Retail sales in the UK declined 2.3% month-over-month in April 2024.
This follows a 0.2% fall in March and is much worse than the forecasted 0.4% drop. This marks the biggest decrease in retail sales in four months, with sales volumes declining across most sectors.
Sales at non-food stores were down 4.1%, including clothing retailers, sports equipment, games and toys stores, and furniture stores.
Retailers reported poor weather and low footfall as the main reasons for the decline.
Additionally, automotive fuel sales showed their largest monthly fall since October 2021.
Food store sales volumes fell for the third consecutive month, mainly due to supermarkets.
7.33am: GSK wins Zantac trial
British pharmaceuticals big cap GSK PLC (LSE:GSK, NYSE:GSK) has won a high-stake personal injury case in the state of Illinois, US, over its heartburn medication Zantac.
A jury determined that Zantac was not responsible for the plaintiff’s colon cancer, with the judge rejecting a request for $640 million in damages.
“This outcome is consistent with the scientific consensus that there is no consistent or reliable evidence that ranitidine increases the risk of any cancer, supported by 16 epidemiological studies looking at human data regarding the use of ranitidine,” GSK said in a statement.
“GSK will continue to vigorously defend itself against all other claims,” said the company.
Angela Valadez, an 89-year-old Illinois resident, claimed that prolonged use of Zantac (ranitidine) caused her to develop colorectal cancer.
The trial was one of the first to go to court among tens of thousands of similar lawsuits filed against Zantac manufacturers, including GSK and Boehringer Ingelheim.
7.18am: FTSE 100 to open lower
The FTSE 100 is set to plummet 69 points to 8,272 when markets open today, extending the 27 points worth of losses encountered on Thursday.
Retail sales severely undershot expectations in the latest quarter, falling 2.7% year on year against an expected 0.2% dip.
It marks the biggest decrease in retail sales in four months, with sales volumes declining across most sectors.
On the company news front, Intertek Group PLC (LSE:ITRK) will shortly have a trading update out, while Keywords Studios PLC (AIM:KWS, OTC:KYYWF)’s AGM comes following a £2.2 billion takeover bid from EQT Group.